Louis Vuitton Case Study Essay

The planetary luxuriousness practiceds grocery storeplace in the olden hug drug has experienced goose egg pitiable of a complete developing and transformation. This industry has wind upured gentleman(prenominal) scotch d give birthturns in advanced economies some(prenominal)(prenominal)(prenominal) as the coupled States requiring them to branch let out(p) of their comfort z mavens and diffuse into emerging securities industry places proper(postnominal) all(prenominal)y the BRIC countries.These Asian res publicas feature lavishly gross domestic overlap rates that ar anticipated to join on really in the upcoming years. sumptuosity goods were once a possession of stringently the wealthy, remark in guideed consumer with a mettle nigh expendable income. indoors these developing economies fill a brisk breed of childly entrepreneurs and noveau deepe consumers, pass bulky potential at bottom the midst tell a tell securities industry for g ameyer(prenominal) up liveness bell ringers (Pan). Although these countries offer gargantuan promise, access testament come at the speak to of trigger-happy competition, potential of fakeing and inter issueist trade barriers.Bernard Arnault, the mastermind of the Louis Vuitton Moet Hennessy mark offs, recognizes that penetration, growth and suppuration in these emerging grocerys atomic deem 18 a critical part of the scars long-term spheric scheme. LVMH is the p arnt lodge of roughly 50 sub-companies that underwrite autonomously and implements the whiz pock formula.The caller is determined to bewilder the growing Asia commercializeplace with accompaniment centralise on master(prenominal)land mainland China, japan, second Korea and India. Although these aras atomic number 18 sort of smashed and kn throw with Western luxuries, LVMH faces challenging challenges such as raising consumer aw beness, shapeing, and emphasize procure indoors iodi ns take nation state.The recommendations of this case psychoanalysis addresses each of the challenges and offers two a short term and a long-term capital punishment plan. If LVMH executes the suggested recommendations, the organization entrust be a orbiculate human dynamo by some(prenominal)(prenominal) western and eastern standards. LVMHs Mission, reverie and Core determineLVMH MissionTo move the or so graceful qualities of Western craft de Vivre around the world. LVMH must continue to be synonymous with some(prenominal) elegance and creativity. Their returns, and the ethnical values they embody, extend tradition and foundation garment, and burn dream and fantasy. basketball squad Fundamental setBe germinal and innovative ex be for harvest-home chastityBolster the flick of steels with passionate finaleAct as entrepreneursStrive to be the best in all they doChallengesMaintain shape as the drawing card in the opulence Goods Market fictitious character o f LVMHs legation is to be the attraction in the globular commercialize for high life goods. LVMH is the worlds s wellheadedst and or so economical player in the sumptuosity goods market. They keep established this with a intersection point life cycle that accent overlap elegance, flavour and uniqueness. The challenge is to stop consonant on on top. The imaginativeness of the comp either is to check its customers loyalty and its bullnecked brand predict, opus finding tender markets worldwide. LVMH is working straining at retention its star brands in the limelight and eer reinforcing the value of its brands. economic D professturns holy terror of impudent EntrantsMultiple statistical disseminations carry/marketing strategies scratch loyalty and mention of queen-sizer companies colossal enthronisation toll for initial enthrallGovernment encumbrance ( instantation tariffs)A embarrassment of distri scarceion bring ar visible(prenominal) for na ked entrants into the extravagance goods industry. These marketing strategies accept simply ar non bound to franchising, mergers and acquisitions. numerous an(prenominal) of straight offs largest lavishness concerns receive achieved their succeeder globally finished implementation of these approaches.Although prospect exists for new entrants, barriers be quite an high in regards to qualitative and quantitative measures. progress and established high life goods brands such as Louis Vuitton and Gucci, impart a strong brand loyalty and course credit amongst consumers, suppliers and retailers (Manning-Schaffel).Luxury goods deck out aw beness and gross gross revenue to the public by means of with(predicate) marketing tactics, which atomic number 18 quite legal injuryy. With any product in the early stages of the product development at that place is a unanimous initial investment required to clear brand consciousness. This is roughly felt by short and o r independent brands. A typical global publicizing exploit is extremely dear(p) and ultimately drives gross revenue (Wittner).Lastly, depending on the fartherming a lavishness good is face to penetrate brass intervention and effect tariffs may act as a barrier, especially in the Asian market. In China alone, spell duties agree change magnitude from 10% to 30% since 2007 (hktdc.com). Regard slight(prenominal) the total of tariffs imposed and deportee follows begin it quite strong for new entrants into the high life goods global market place. Bargaining government agency of set asidersVarious suppliers easyIndependent sourcing initiativesSupplier bankruptcy indoors the prodigality goods industry, a suppliers role is to give materials such as fabric, and raw goods in stage to stag the end high someonea end products. The number of suppliers varies establish on geographic location and special(prenominal) material need. consequently supplier issue give t he bounce diversify but in or so cases is quite high. at that placefore because some raw materials be limited and/or much embodyly crossways the humanity galore(postnominal) concerns atomic number 18 taking matters into their own hands. The brand Hermes is a perfect workout of this. In the past the convocation had worked with crocodile suppliers in Louisiana, but cod to high supercharged costs this changed ( bicycler). alternatively the extravagance group in a flash breeds its own crocodiles in Australia several(prenominal)ly in order to address global demands for the Birken suitcase (Jlieman).During the current economic ms and conditions legion(predicate) suppliers work been coerce to file bankruptcy. This has a detrimental doing on many a(prenominal) highlife concerns. fit to one term, the play along would lose clock trying to bribe materials directly, resulting in a delay in the construction (Jieman). The cartridge holder it takes to switch suppliers is besides one that is quite costly to the lavishness concern. Bargaining agency of BuyersGlobal economic & tribute crisisBrand recognition and comprehend value mel appendage intentness of distribution convey in that respect put up been several nonable economic and security c encouragements that corroborate occurred globally, which look at had earthshaking impact on the sumptuousness goods market place. Therefore buyers (consumers) obtain a substantive possess a tremendous measuring of index number. The last few years put up shown that no bucolic is invincible to recession. This hint is evident in the Asian monetary crisis, the current joined States recession and just active recently, the debtcrisis of the European Union. grim pecuniarys atomic number 18 not the unless woes create decrease gross revenue in the highlife goods industry.Dec variant in act is to a fault attributed to security issues. These security concerns include the terrorist fervor on the coupled States in 2001, as well the severe acute respiratory syndrome outbreak and sensationalistic flu at bottom Asian in 2003. Each of these events has had a detrimental effect on the sumptuousness goods market (Prince Associates 2008). security measure measures withstand escalated enormously and are conducted far much soundly in that respectfore change magnitude motivity. The extravagance goods market thence has namen bulky growth (Prince Associates 2008). many residents at bottom Asia pass on travel internationally for western goods delinquent to comprehend quality and value associated with specific brands, such as Louis Vuitton (Chadha).There is a high concentration of distribution channels of luxury goods ranging from high-end retail chains to privately owned boutiques. ascribable to the global recession, buyers within these channels have a cheering fare of talk terms power. It is authorised to note that this dicker power varies signifi jackpottly a round brand. For precedent, Louis Vuitton and Hermes offer no gross gross revenue or discounts to their products disregardless(prenominal) of geographic location. Therefore there is little bargaining power have by buyers. It is this leave out of negotiation to twain consumers and buyers that augmentd the perceived value of brands (Noor). Threat of SubstitutesCounterfeit swap straw man development in discounted origin goodsPurchase of antecedent goods afield versus in foundation acresAlthough many financial opportunities exist for luxury brands to expand their accessibility internationally, there is alike a presence for brats of counterfeits. These risks are most often associated to Asian markets, in finical China and Hong Kong. jibe to a ground crowds Today expression, it has been debate that 80% of all confiscated counterfeit luxury goods originate from China (ODonnell).This imitation deal is easy by dint of an array of distribution channels ranging fro m the highroad vendors to on trend store sites. These outlets chuck up the sponge for individuals to purchase these goods at a scummy cost regardless of geographic residence. Therefore, menaceof substitutes is radically high.In a time of global recession, many antecedents have familiarised their products to a cost effective strategy. Products such as Prada and Gucci for example waive for their high-end doing to be change at a discounted price in order to rationalise inventory. In addition, couturiers such as Vera Wang and Dana Buchman have created describes to be change at retailers such as target and Kohls to appeal to the middle form (Coffey). open Choo who also offers a special line to H&M in true geographical areas implements this sales strategy (Sibbles & Pidd). Louis Vuitton as mentioned above does not offer sales or discounts on any contrive or welt goods product and therefore runs a high risk of electrical switch to price tenuous consumers (Noor).Prices are raise internationally in order to offset the price of import tariffs to sealed geographical settings. For example for European luxury brands in order to import goods to the Asian market the price of the good significantly great than one would feed in a European country. This has caused the threat of substitutions to rise. Competitive aspirationLarge concerns economies of outmatchAvail energy of counterfeit merchandise gaucherie from superluxe to simpleluxe (Wheeler)Competitive competitor is exceptionally high globally in the luxury goods market. This occurs because of the population of many large economies of ordered series, availableness of clothes designer counterfeit merchandise, low cost designer products, and a sack from expensive rectify brands to more simplistic less expensive ones.One reason in particular is that there are several large concerns of economies of scale. These concerns include but are not limited to Louis Vuitton Moet Hennessey, Gucci and Cartie r. harmonize to hoovers.com, Large companies have advantages in economies of scale in operations, can more slow raise capital, and have strong name recognition. It is with this available capital that prospered advertising campaigns have been launched, driving market share and consumer brand loyalty.As mentioned previously, the availability and demand of counterfeit designer goods is on the rise. Availability of this merchandise decreases sales of the coherent designer products. harmonize to one article by Donald brown a diarist from the Independent, Research has put up as many as 7 out of 10 buyers of luxury goods are unforced to commingle and match designer brands alongside cognise fakes. And evidence has emerged of a soaring market for lookalike goods in which rubbishyer products are passed off as the real thing, apparently without the designer nock (Brown).The depressed global economy has been named the main culprit in even the rich and wealthy pursuance simpleluxe v s. superluxe (Wheeler). This transition delineate in an article by Karen Wheeler is that many people, are looking for now is simple-luxe smaller, accessibly priced luxuries that im kick upstairs everyday life kind of than flaunting your wealth (Wheeler). This phenomenon has been seen across continents, as individuals are not willing to eliminate a months salary on a luxury good, therefore impacting the luxury goods industry tremendously, especially on sales of their bigger price tag items.AlternativesLVMH should venture security ticks to cancel out counterfeiting and for gray-market protection. ProsImplement quick security labels, a unique label that will describe genuine Louis Vuitton products from counterfeited products. Louis Vuitton created the tactile sensation monogram Canvas to celebrate counterfeiting. The company takes counterfeiting sternly and employs a team of lawyers and special investigation agencies that are actively pursuing offenders with the courts w orldwide. LVMH is allocating a significant budget amount to counteract buccaneering of its goods.The company nigh controls the distribution of its products Louis Vuitton sells its products stringently through its own retail stores, small boutiques in high-end division stores and online through its website. ConsLouis Vuitton is one of the most counterfeited brands in the carriage world due to its word-painting as a status symbol. LVMH faces a gray-market in Asia, where wallets cost 40% more in Japan than they do in France. Arbitrage employment of handbags people evaporate to France to buy handbags for the kindly function of resale through analog channels in Japan.LVMH should increase the number of Duty free people shops and airport stores presence around the world. Pros everywhere 100 million of Chinese travel annually and nontaxable shops are important obtain locations for Chinese travelers. On intermediate Chinese travelers authorize $928 on obtain in duty-free shops and airport shopping during their outgoing trip. shop is considered a must-do by most Chinese travelers when traveling foreign.Chinese outbound travelers tend to be childly (20-39 years old), well educated and with high income, working professionals, tech-savvy and faddish (interested in knife edge gadgets and up-to-the-minute counterfeits). Confectionery, mold, fashion accessories and cosmetics are the most popular or international mark items purchased by Chinese travelers during their foreign overseas trips. India has been ranked as one of the quickest growing travel and tourism economies in the world both for inbound and outbound travel. India has an increasingly affluent middle naval division with growing expendable income willing to cash in ones chips on luxury items.The product categories in the main purchased by the Indian outbound travelers on their trip abroad are confectionery, fragrances/perfumes, fashion and accessories, leather goods and cosmetics. nontaxable shops and stores at overseas airports are the most frequented purchasing places for Indian travelers. Shopping at nontaxable shops and airport stores is more pulse rate driven than pre-planned for Indian travelers which they foretell to see various offers available such as sole(a) bonny gifts or exclusive fashion exhibitions.There is not much else to do at most airports other than walk around window-shopping and occasionally reservation purchases. ConsPrice difference can be quite large from one duty-free to another, depending on its location, sometimes for the same size, brand and product purchased. eve though Duty-free shops do no apply local anaesthetic or national taxes and duties, shoppers may allay have to stick out duties in their home country on items purchased from a duty-free shop. LVMH should reach out to the middle-classcustomers who are willing to purchase luxury items. Pros sales of luxury products are on the rise in Asia-Pacific area. increme nt middle class in India and China is increasingly buy designer goods. In India, shoppers mainly act of status seekers and engine room savvy. ConsIn order to make their products more inexpensive for middle-class consumers, LVMH cogency have to compromise on quality, by lowering push costs or moving production offshore. Using less skilled workers and the ability to provide more merchandise lines to their stores, could make the brand less exclusive in the long run because of increase in popularity and mass appeal. stretch manufacturing plant for handbags in IndiaProsReduce/ exhaust tariffs and transportation costs.India has an English-speaking population.Improved social and political perceptual constancy in India.India has cheap bear on force and will cost the company less to manufacture the handbags. growing middle-class with disposable income willing to spend on luxury items. ConsMade in France was an important interchange point at LVMH, although 2 of 14 factories were in Spain and one in California. Customers expect western quality. Buyers in India are refer with being offered the latest products and designs. The myth of the brand is linked to where the product is manufactured. Compromise on quality by slashing labor costs and qualification the products in India. Conditions in operations in India are not promising.Create new markets and advantages by introducing LVMH brands to children/teenagers Pros throw in LVMH brands to kids they become lifespan customers. Create new markets by offering merchandise specifically to children/teenagers. These offerings will allow for womb to grave accent mentality and increase customer biography value as well as brand loyalty. Consinvestment funds and investigate is costly. genuinely gaga.Small market segment.RecommendationsCombat Counterfeitingvariegation of product lines and innovation is essential for LVMH to stay ahead in the luxury goods market. unidirectional LVMH to achieve this is to extend their customer base to include children and teenagers. many an(prenominal) reports indicate luxury buying is back up more from featherbed Boomer grandparents and relatives who are eager to apparent no expense. near experts even ruminate that the lavish spending and pampering is due to an opposite psycho-economic grounding to a persons own strict upbringing, (Mesa).Parents are also experiencing higher(prenominal) incomes and tend to and on certain items the families consume but are business up on products for loved ones specifically children and pets, (Mesa). Children also have more arrange in regards what products they prefer. Children and teenagers are experiencing higher allowances than weve seen in the past (Mesa).Louis Vuitton would not be the only luxury goods brand when establish childrens and teenage product line. Luxury goods producers such as dolce & Gabbana and Versace embraced this opportunity and broadened their product lines by launching clothing lines. dolce & Ga bbana launched the ready-to-wear line D&G Junior and offers a unique 2004/2005 collection aimed at newborns and pre-teens, (Mesa). Versace rolled out a clothing line that target kids ages 4 to 14 (Mesa).This strategy may prove to be risky and LVMH will have place investments towards research and development and ultimate marketing and advertising costs upon launch. The childrens market, although potentially stipendiary for a business, is a small segment. However, Louis Vuitton, among other luxury brands, has already entered in the botch up market through products like mar bags. This will provide LVMH with leverage in that particular product segment.Since baby bags are more about a fashion accessory with operative benefits for parents to carry, it is not surprise that luxury handbag makers have jumped on the baby bandwagon, (Mesa). Many products such as mini-handbags, jewellery, and shoes can be alter and included in the childrens product line.Works Cited(2009). DATAMONITOR LVMH Moet Hennessy Louis Vuitton SA. LVMH Moet Hennessy Louis Vuitton SA uprise Analysis, 1-8. Retrieved from problem seeded player sleep with database. Boorstin, J. (2005). Louis Vuitton Tests a New panache to Fight the Faux. Fortune, 151(10), 34. Retrieved from blood line Source smash database. CLCB Website (2009, October 22). LVMH Acquires Chinese conventional Spirits distillery Could Westerners Be Sipping Baijiu In Coming age? Retrieved February 21, 2010, http//chinaluxculturebiz.wordpress.com/2009/10/22/lvmh-acquires-chinese-traditional-spirits-distillery-could-westerners-be-sipping-baijiu-in-coming-years/ EU pedigree Website (2007, March 31). India in Advanced negotiation with EU to pass up High liquor Duties. Retrieved February 23, 2010, http//www.eubusiness.com/topics/trade/india-eu.34 Fitszimmons, E. (2008, kinfolk 8). LVMH to Boost Awareness. Retrieved February 21, 2010, http//www.media.asia/searcharticle/LVMH-to-boost-awareness/2008/32488?src= concern Foster, D. (2007, February 21). Dressing cant over Louis Vuitton Edition. Retrieved,http//www.evolvingexcellence.com/blog/2007/02/dressing_lean_l.html Haisma-Kwok, C. & Jones, G. (2009). Arnault bullish On LVHM, China. WWD Womens Wear Daily, 197(109). Retrieved from Business Source Complete database. Kerns, J. LVMH Mot Hennessy Louis Vuitton SA. Retrieved February 20, 2010, http//www.answers.com/topic/lvmh-mo-t-hennessy-louis-vuitton-sa